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Required Report - public distribution

Date: 3/28/2006

GAIN Report Number: RO6006

RO6006

Romania

Trade Policy Monitoring

Annual

2006

Approved by:

Brian Goggin

U.S. Embassy Bucharest

Prepared by:

Cristina Cionga

Report Highlights:

Although in 2005 growth rate halved compared to the previous year, Romania is still one of the most dynamic European economies and the top importer of US agricultural products in the region. Adoption and implementation of EU measures will impact U.S. exports of meats (poultry, pork) and biotechnology products to Romania.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Sofia [BU1]

[RO]

Table of Contents

Executive Summary 3

OVERVIEW 3

Table 1. Romanian Agricultural and Food Trade, chapters 1-24 in the HS 4

Table 2. Top Romanian Agricultural Imports, 2005 5

Table 3. Top Romanian Agricultural Exports, 2005 5

Table 4. Romania’s Agricultural Trade by Region (million US$) 6

AGREEMENT COMPLIANCE 7

World Trade Organization 7

Market Access 8

Tariffs 8

Sanitary and Phytosanitary Measures 9

Biotech Policy 10

Export Subsidies 11

Domestic Support 11

Table 5. Production Support for Crop Programs, 2006 13

OTHER TRADE AGREEMENTS 14

The European Association Agreement 14

Table 6. TRQs applied in 2006 for Primary Agricultural Imports Originating from EU 16

Table 7. TRQs applied in 2006 for Processed Agricultural Imports Originating from EU 20

TRADE RESTRICTIONS AND OPPORTUNITIES 21

Executive Summary

OVERVIEW

Over the last few years, Romania has achieved important improvements in its

macroeconomic indicators, in a consistent effort of the government authorities, as the country’s EU integration is approaching. The economy continued to grow in 2005, though the rate halved (4.1 percent compared to 8.3 percent in 2004, see Figure 1), while end-of-period consumer price index (CPI) inflation went down to 8.3 and is likely to hit 6.5 percent by year-end 2006 and then fall to 4 percent by the end of 2007. Nonetheless, such projections may be affected by the high world oil and natural gas prices and the periodic adjustment of administered prices for a number of items (accounting for 23% of the CPI basket). The public deficit (a major source of instability in the past) was reduced from 4% of GDP in 2000 to an estimated 0.8% in 2005. There are indications that Romanian economy is going to slightly accelerate its growth to 4.5% in 2006 and further to 5.2% in real terms, based on better performance of investments and exports[1]. With a GDP per capita of about US$4,000 in 2005 (up from US$1,585 in 1999), Romania is a middle-income country. Some 25% of its population lives below the poverty line.[2]

The national economy is quite diversified, with services being the most important sector in terms of contribution to GDP (roughly 49 percent, up from 45 percent a year earlier). Agriculture is a key sector, contributing 13 percent to GDP (2004) and employing more than 30% of the labour force. Nonetheless, unfavorable weather conditions slowed down this sector’s growth in 2005, year in which agriculture’s value added weight in total GDP decreased to 9 percent.

While an exchange rate-based monetary policy used from 1999 to reduce inflation to a single digit, the central bank officially switched to an inflation-targeting regime in July 2005; this has been an appealing policy development to investors, who trusted the leu[3] (that is, the national currency)’s appreciation. From November 2004, Romania maintains a managed floating exchange rate regime, while since mid-2005 the country has taken further steps towards full capital-account convertibility, in preparation for its EU accession. From 1 July 2005, non-residents have no restrictions on operations in current and deposit accounts. Consequently, Romania, which hopes to join the European Community in 2007, has become a target for portfolio investors, drawn by its still high interest rate (around 8.5 percent) and steadily appreciating currency. Nonetheless, the stronger leu penalizes country’s export competitiveness: in 2005, Romania's trade deficit widened over 46 percent compared to the previous year. The Central Bank’s representatives have nonetheless expressed views that not only leu’s appreciation has led to lower exports, but also the ineluctable structural changes (towards higher value-added products like machinery and equipment[4]) in country’s export base themselves. Productivity gains and prudent wage policies are needed thus to offset the impact of the stronger domestic currency.

The current account deficit continued to soar in 2005, reaching an estimated 8 percent of GDP, on the background of:

• balance of payment deficit financing: FDI, transfers, portfolio investment, multilateral and commercial external lending;

• growing imports and exports;

• improved access to international capital markets – interests on a downwards trend, increased maturities, debt diversification;

• no significant increase in domestic and external debt levels;

• National Bank reserves continue to consolidate.

Romania exports quite a diversified range of products, but obviously the weight of manufactured goods has increased since 2000, while the shares of food and mining products have declined. Traditional exports like textiles and clothing products are also losing ground.

The trade deficit in agricultural and food products (HS chapters 1-24) continued to deepen in 2005, reaching a new record at $1.6 billion, 28 percent up from the previous year (Table 1), with the value of exports covering just 33 percent of the total import value. This accelerated increase in agricultural merchandise trade deficit has largely been the result of the GDP growth rate, and the rapid expansion in imported meats (swine, poultry), tobacco and cigarettes, sugar, various food ingredients and preparations (Table 2).

Table 1. Romanian Agricultural and Food Trade, chapters 1-24 in the HS

(million US$, nominal prices)

| |1997 | |2000 |2001 |2002 |2003 |2004 |2005 |

|Agri-food exports (fob) |594 |… |338 |433 |434 |568 |730 |833 |

|Agri-food imports (cif) |695 | |932 |1206 |1174 |1738 |2042 |2513 |

|Balance |-101 | |-594 |-773 |-740 |-1170 |-1312 |-1680 |

|Exports as a percentage of imports |85 | |36 |36 |37 |33 |28 |33 |

Source: Romanian Customs

Table 2. Top Romanian Agricultural Imports, 2005

|HSC |Product | IMPORT | |

| | | Amount (MT) | Value (thou $) |

|0203 |Meat of swine, fresh, chilled or frozen | 192,490 | 388,103.1 |

|2402 |Cigarettes, cigars and other | 10,677 | 223,490.5 |

|1701 |Cane or beat sugar and chemically pure sucrose | 540,402 | 139,690.5 |

|0207 |Poultry meat and offal | 160,076 | 131,432.3 |

|2106 |Food preparations NESOI | 38,467 | 111,479.4 |

|0901 |Coffee, whether or roasted or decaffeinated | 43,242 | 86,688.7 |

|2401 |Raw tobacco | 20,930 | 77,318.4 |

|2309 |Preparations used in animal feeding | 122,060 | 72,267.0 |

|0803 |Bananas, fresh or dehydrated | 143,207 | 65,858.8 |

|0805 |Citrus fruits, fresh or dehydrated | 141,616 | 52,248.6 |

|0303 |Fish, frozen, excluding fish fillets and other fish meat of heading 0304 | 60,176 | 51,254.5 |

|0202 |Meat of bovine animals, frozen | 24,191 | 48,548.8 |

|1905 |Bread, pastry, other bakers’ wares | 18,464 | 44,287.9 |

|2208 |Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% | 5,824 | 43,705.5 |

|1511 |Palm oil, whether or not refined | 45,144 | 29,661.0 |

|0504 |Guts, bladders and stomachs of animals | 9,076 | 27,560.6 |

|1206 |Sunflowerseed, whether or not broken | 53,036 | 27,254.7 |

|1806 |Chocolate and other | 10,150 | 26,797.1 |

|2005 |Vegetables, processed or preserved, other than in vinegar, NESOI | 29,623 | 25,864.6 |

|2008 |Fruits and other edible plant parts | 20,856 | 25,467.9 |

|0209 |Pig fat and poultry fat, fresh, chilled, frozen, salted, in brine, dried or | 33,031.94 | 24,694.6 |

| |smoked | | |

|2304 |Soybean meal | 88,132.97 | 24,487.4 |

|1001 |Wheat and meslin | 158,767.70 | 23,533.2 |

|0206 |Edible offal fresh, chilled, frozen | 31,526.52 | 23,079.1 |

|1006 |Rice | 79,729.10 | 22,352.9 |

Source: Romanian Customs

Agricultural exports in 2005 continued the steady upward evolution begun in 2000, registering a 14 percent growth, with most traded products in live sheep (11 percent of the total), live bovine animals (9 percent), corn (6 percent), oilseeds for crushing (6 percent), edible oil (6 percent), and barley (4 percent) (Table 3).

Table 3. Top Romanian Agricultural Exports, 2005

|HSC |Product |EXPORT | |

| | |Amount |Value (thou $) |

| | |(MT) | |

|0104 |Live sheep animals |41,545.0 |91,763.1 |

|0102 |Live bovine animals |35,355.1 |73,860.1 |

|1005 |Corn |430,282.8 |55,310.5 |

|1206 |Sunflowerseed, whether or not broken |188,439.3 |55,106.7 |

|1512 |Refined sunflowerseed oil |83,332.4 |54,723.5 |

|1003 |Barley |317,460.7 |37,620.6 |

|0802 |Other nuts, fresh or dried, whether or not shelled or peeled |9,953.0 |31,590.4 |

|1001 |Wheat and meslin |258,836.3 |30,232.9 |

|1205 |Rapeseed whether or not broken |111,669.3 |28,407.2 |

|0709 |Other vegetables, fresh or chilled |3,836.3 |25,114.6 |

|1905 |Bread, pastry, other bakers’ wares |12,271.1 |24,450.1 |

|2306 |Oilcake and other solid residues |260,024.3 |23,940.7 |

|2204 |Wine of fresh grapes, including fortified wines |26,956.4 |22,298.2 |

|2009 |Fruit juices and vegetable juices, unfermented |32,836.4 |21,699.3 |

|1602 |Other prepared or preserved meat, meat offal or blood |5,021.7 |17,243.9 |

|0710 |Vegetables (uncooked or cooked by steeming), frozen |3,426.8 |17,141.5 |

|0406 |Cheeses and curd |4,298.7 |14,849.6 |

|0409 |Natural honey |6,631.6 |12,525.1 |

|1201 |Soybeans whether or not broken |49,780.2 |12,453.2 |

|2106 |Food preparations NESOI |7,260.9 |10,044.4 |

|1507 |Soybean oil, whether or not refined |17,081.4 |9,543.8 |

|0207 |Poultry meat and offal |2,593.0 |8,758.9 |

|0712 |Dried vegetables, whole, cut, sliced, but not further prepared |369.7 |8,372.0 |

|0204 |Meat of sheep or goats fresh, chilled or frozen |1,586.1 |7881.1 |

|0101 |Live horses and mule animals |5,711.7 |7,795.0 |

Source: Romanian Customs

About two thirds of Romania's agricultural exports go to the EC (Table 4); Italy is still the major single export market (16.5 percent of total merchandise exports in 2005), followed by Spain (9.3 percent), Greece (8.4 percent), and Germany (7.6 percent). The share exported to another major partner, Turkey, rose to 8.4 percent from 6 percent in 2004. The value of Romania's agricultural exports to the United States decreased by 11 percent in 2005.

Total merchandise agricultural imports have increased constantly over the last few years, reaching a peak of $2,513 million in 2005 (up from $2,042 million in 2004), due to strong GDP growth. Swine meat represented 15 percent of the total (compared to 11 percent in 2004); the share of cigarettes and tobacco products made up about 12 percent, while the share of sugar almost reached 6 percent. Other major imports continued to be in 2005 poultry meat and various food ingredients.

Table 4. Romania’s Agricultural Trade by Region (million US$)

| |Exports |Imports |2005 |

| |2002 |2003 |2004 |2005 |2002 |

| | |RON |Vouchers |Cash payment | Thou lei (RON) | |

|Non-GM soybean |Ha |500 |250 |250 | 17,500 | 35,000 |

|Technical plants |Ha |900 |450 |450 | 1,800 | 2,000 |

|Rice |Ha |1500 |750 |750 | 9,000 | 6,000 |

|Medical and Aromatic Plants |Ha |1110 |555 |555 | 6,660 | 6,000 |

|Hops |Ha |1441 |721 |720 | 722| 501 |

|Fruit tree plantations |Ha |400 |400 |  | 40,000 | 100,000 |

|Vineyards |Ha |200 |200 |  | 20,000 | 100,000 |

|Sugar beat |Ha |1.5 |750 |750 | 44,250 | 29,500,000 |

|Field vegetables |Ha |400 |200 |200 | 20,000 | 50,000 |

|Greenhouse vegetables |Ha |4 |2 |2 | 10,000 | 2,500,000 |

|Greenhouses |Ton |500 |  |500 | 22,500 | 45,000 |

|Mushrooms |Ton |500 |  |500 | 2,500 | 5,000 |

|Authorization of vineyards of|Ha |10 |  |10 | 160| 16,000 |

|known origin | | | | | | |

|Certification and marking of |Liter |0.12 |  |0,12 | 9,600 |  |

|quality of wine of known | | | | | | |

|origin | | | | | | |

|Processing of textile fibers |Ton |311.5 |  |311,5 | 300|  |

|Tomatoes for processing |Ton |125 |  |125 | 3,125 | 25,000 |

|Peaches for processing |Ton |170 |  |170 | 570| 3,353 |

|Other fruits and vegetables |Ton |150 |  |5.4 | 5,400 | 36,000 |

|for industrialization | | | | | | |

|Tobacco |Ton |1876 |  |1876 | 23,100 | 12,313 |

|Support to producer groups |  |  |  |3 | 3,000 |  |

|for fruit and vegetable | | | | | | |

|production | | | | | | |

|Certified organic crops |Ha |728 |  |728 | 11,650 | 16,003 |

|Total | | | | | 251,837 |  |

Source: Ministry of Agriculture, Forestry and Rural Development

OTHER TRADE AGREEMENTS

The European Association Agreement

The EU Association Agreement was Romania’s first major step towards the European membership. Ratified in 1995, it provides that both partners are committed to reciprocally make concessions for industrial products so that by the end of the transitional period (i.e., in 2002) all tariffs and quotas would be eliminated. This is not the case of agricultural products, acknowledged as very sensitive and for which the most important provisions concern import quotas with reduced levies and preferential tariff rates.

The EU phased out more rapidly its trade barriers, granting concessions in either unlimited volumes or within TRQs for agricultural products imported from Romania.

Similarly, Romania granted two types of preferences to the EU:

• reduced tariffs for some products, either in unlimited quantities

• tariff bindings for processed agricultural commodities

These initial concessions were subject to subsequent renegotiations over the last years. The results of these negotiations were grouped under the “double zero” and the “double profit” agreements.

A new phase of bilateral liberalization of the agricultural trade regime was concluded between the Government of Romania and the European Union in May 2005 and promulgated by the Romanian Parliament in July in the form of an Additional Protocol to the “European” Association Agreement. This Protocol is seen as a further and necessary step prior to Romania’s 2007 or 2008 full EU membership and assessed to give the trade flows between Romania and EU-25 a new boost.

Romania is currently in full process of adopting the common market mechanisms, although a tight budget makes authorities concerned about how domestic exporters will be able to use the new trade concessions. EU domestic support and export refund practices, combined with a lack of competitiveness of the local producers themselves, resulted, for Romania, in increasing agricultural trade deficits since 1995, when the European Agreement was ratified by the two parties.

The May 2005 Additional Protocol to the European Agreement entered into effect on August 1, 2005, provides two types of lists of products for which the two parties reached consensus in improving market access:

1) A list of products for which trade will be fully liberalized. Among the products originated from EU that will be applied zero customs duties when imported into Romania there are:

live dairy cows both for reproduction and dairy purposes,

swine animals both for breeding and production,

live chickens, meat of wild boar, meat of sheep or goats,

beef liver and offal (HSCs 0206 1091, 0206 1099, 0206 2100, 0206 2200, 0206 2999)[7],

swine liver, fresh or frozen (0206 3000 and 0206 4100),

pig fat dried or smoked (0209 0019 and 0209 0030),

meat and edible meat offal salted, in brine, dried or smoked (including swine liver and offal: 0210 9941, 0210 9949, bovine offal 0210 9959, geese liver),

bee honey (0409 0000),

various vegetables,

fresh of frozen,

coconuts, other nuts,

fresh or dried (0802),

various fruits (bananas (0803),

tropical fruits (0804),

citrus fruits (0805),

fresh grapes for wine,

raisins (0806 20), pears and quinces, cherries, plums, raspberries, currants),

coffee (0901),

seasonings and aromatic plants,

starches,

peanuts (1202),

sunflowerseed for sowing,

hop cones (1210),

other pig fat (including lard) and poultry fat (1501 00),

other fats of bovine and sheep animals (1502 00),

fats of fish,

crude and refined soybean oil for technical use (1507 1010 and 1507 9010),

peanut oil, olive oil, sunflowerseed oil for technical use, rapeseed oil,

homogenized preparations of liver (1602 2011, 1602 2019),

other prepared meat of swine (1602 4190, 1602 4290, 1602 4990),

maple sugar and syrup (1702 20), other sugars, including pure lactose, maltose, glucose and fructose (1702 1900, 1702 30, 1702 9060, 1702 9071, 1702 9075, 1702 9079, 1702 9080, 1702 9099, 1703),

vegetables preserved by vinegar, other than by vinegar or by sugar,

peanuts and peanut butter (2008 11),

roasted almonds & pistachio (2008 1913 and 2008 1993), nut and dry fruit mixtures, pineapple and pineapple juice, citrus and tropical fruit juice,

grape must (2204 30),

fermented beverages (cider, perry, mead: 2206 00),

residues of cereals (2302),

residues of starch manufacture (2303),

oilcakes (soybean 2304 00, peanut 2305 00, other 2306),

preparations for animal feeding (2309 90),

albumins,

flax and hamp.

2) A list of products for which increased in-tariff quotas apply from August 1, 2005. Ministerial Orders 745 and 746 of the Ministry of Economy and Trade lay down the TRQs for products originated from EU that will apply from January 1- December 31, 2006 (Tables 6 and 7).

Table 6. TRQs applied in 2006 for Primary Agricultural Imports Originating from EU

| |HSC |Product |TRQ (MT), |Date of opening |Import duty (%)|Unitary |

| | | |if not otherwise |(dd.mm.yy) | |allocation (MT if|

| | | |specified | | |not otherwise |

| | | | | | |specified) |

|2. |0103 92 19 |Live swine animals weighing more|14,000 |03.01.2006 |  |150 |

| | |than 50 kg (except for breeding |  |  |15 |  |

| | |sows weighing more than 180 kg |1,000 heads |03.07.2006 |  |60 heads |

| | |and for purebred breeding | | |  | |

| | |animals) | | | | |

|3. |0201 |Meat of bovine animals, fresh, |4,000 |03.01.2006 |exempted |20 |

| |0202 |chilled or frozen | | | | |

|4. |0203 22 |Swine meat, fresh, chilled or |23,000 |03.01.2006 |exempted |40 |

| |0203 29 |frozen. | | | | |

| |0210 11 | | | | | |

| |0210 12 | | | | | |

| |0210 19 | | | | | |

|5. |0206 10 95 |Fresh or chilled edible offal of|100 |03.01.2006 |exempted |1 |

| |  |bovine animals, other | | | | |

| |  |Frozen edible offal of bovine | | | | |

| |0206 29 91 |animals, other | | | | |

| |  |Meat of bovine animals salted, | | | | |

| |  |dried or smoked | | | | |

| |0210 20 |Edible offal of bovine animals, | | | | |

| |  |other | | | | |

| |0210 99 51 | | | | | |

|6. |0207 |Meat and edible offal, of the |9,000 o/w: |  |exempted |  |

| | |poultry of heading 0105, fresh, |4,500 Sem, I |03.01.2006 |  |  |

| | |chilled or frozen |o/w: |  | |  |

| | | |1,000 new importers |  | |20 |

| | | |3,500 traditional |  | |20 |

| | | |importers |03.07.2006 | |  |

| | | |4,500 Sem, II, o/w | | |  |

| | | |500 new | | |20 |

| | | |4,000 traditional | | |20 |

|7. |0402 10 19 |Milk and sour cream, in powder |1,500 |03.01.2006 |exempted |20 |

| |0402 21 11 |or other solid forms |  | | | |

| |0402 21 19 | |  | | | |

| |0402 21 91 | |  | | | |

|8. |0403 10 11 to |Yogurt, plain, no sugar or cocoa|1,000 |03.01.2006 |exempted |20 |

| |0403 10 39 |added | | | | |

| |0403 90 11 to | | | | | |

| |0403 90 69 |Other, plain, no fruit or cocoa | | | | |

| | |added | | | | |

|9. |0405 10 |Butter and other fats derived |1,900 o/w: |  |exempted |  |

| |0405 90 |from milk |950 Sem,I |03.01.2006 | |20 |

| | | |950 Sem,II |03.07.2006 | |20 |

| | | |  | | | |

|10. |0406 |Cheese and curd |3,000 o/w: |  |exempted |  |

| | | |1,400 Sem,I |03.01.2006 | |20 |

| | | |1,600 Sem,II |03.07.2006 | |20 |

|11a |0407 00 11 |Birds’ eggs for hatching  |2,000 |03.01.2006 |exempted |15 |

| |0407 00 19 |  |  | | | |

|11b |0407 00 30 |Other |330 |03.01.2006 |exempted |15 |

| |0408 11 80 |Birds’ eggs not in shell | | | | |

| |0408 19 81 | | | | | |

| |0408 19 89 | | | | | |

| |0408 91 80 | | | | | |

| |0408 99 80 | | | | | |

|12. |0701 90 10 |Potatoes, fresh or chilled, |20,000 |03.01.2006 |exempted |60 |

| |0701 90 50 |other than for sowing or for |  | | | |

| |0701 90 90 |starch production | | | | |

|13. |07 02 00 00 |Tomatoes |300 |03.01.2006 |exempted |10 |

|14. |0703 10 19 |Onion, chilled or fresh (not for|5,000 |03.01.2006 |exempted |20 |

| | |sowing) | | | | |

|15. |0706 10 00 |Carrots and turnips, fresh or |1,000 |03.01.2006 |exempted |10 |

| | |chilled | | | | |

|16. |0706 90 10 |Celery, fresh or chilled |250 |03.01.2006 |exempted |5 |

|17. |0707 00 05 |Cucumbers, fresh or chilled |200 |03.01.2006 |exempted |5 |

|18. |0709 51 00 |Agaricus-type mushrooms, fresh |300 |03.01.2006 |exempted |5 |

| | |or chilled | | | | |

|19. |0808 10 80 |Fresh apples (except for the |500 |03.01.2006 |exempted |5 |

| | |ones for cider, in bulk, from | | | | |

| | |Sept 16 to December 15 and | | | | |

| | |Golden Deliciuos and Granny | | | | |

| | |Smith varieties) | | | | |

|20. |0809 10 00 |Fresh apricots |200 |03.01.2006 |exempted |5 |

|21. |ex 1001 |Wheat and meslin, except for |125,000 |03.01.2006 |exempted |2000 |

| | |durum wheat for sowing | | | | |

|22. |1002 00 00 |Rye |30,000 |03.01.2006 |exempted |500 |

|23. |1003 00 |Barley |57,000 |03.01.2006 |exempted |200 |

| |1102 90 10 |Barley flour |  | | | |

| |1103 19 30 |Barley groats and meal | | | | |

| |1103 20 20 |Barley pellets | | | | |

|24. |1004 00 00 |Oats |7,000 |03.01.2006 |exempted |200 |

| |1102 90 30 |Oats flour | | | | |

| |1103 19 40 |Oats groats and meal | | | | |

| |1103 20 30 |Oats pellets | | | | |

|25. |1005 10 |Corn for sowing |3,700 |03.01.2006 |exempted |100 |

|26. |1005 90 00 |Corn, other than for sowing |49,000 |03.01.2006 |exempted |1000 |

| | | |  | | | |

|27. |1006 |Rice |10,000 |03.01.2006 |exempted |200 |

| |1102 30 00 |Rice flour |  | | | |

| |1103 19 50 |Rice groats and meal | | | | |

| |1103 20 50 |Rice pellets | | | | |

|28. |1101 00 |Wheat and meslin flour |3,000 |03.01.2006 |exempted |50 |

| |1103 11 |Wheat groats and meal | | | | |

| |1103 20 60 |Wheat pellets | | | | |

| | | |80,000 |03.01.2006 |15 |50 |

|29. |1105 |Potato flour and meal |100 |03.01.2006 |exempted |5 |

|30. |1107 |Malt |31,100 |03.01.2006 |exempted |1000 |

|31. |1507 10 90 |Crude soybean oil |2,500 |03.01.2006 |exempted |20 |

| |1507 90 90 |Other soybean oil |  | | | |

|32. |1517 10 90 |Margarine with less than 10% fat|1,000 |03.01.2006 |exempted |20 |

| | |content |  | | | |

|33. |1601 00 10 |Sausages prepared of liver and |1,125 |03.01.2006 |exempted |10 |

| |  |similar products | | | | |

| |  |Sausages not made of meat, offal| | | | |

| |1601 00 91 |and blood (except for liver) | | | | |

| |  |Sausages and similar products, | | | | |

| |  |of meat, offal (other than | | | | |

| |1601 00 99 |liver) or blood | | | | |

|34. |1602 10 00 |Homogenized preparations of |1,250 |03.01.2006 |15 |10 |

| | |meat, offal or blood, in packs | | | | |

| | |under 250 grams | | | | |

|35. |1602 31 la 1602 |Poultry meat, prepared or |1,200 |03.01.2006 |exempted |20 |

| |39 |preserved | | | | |

|36. |1602 41 10 |Ham & cuts thereof, of swine |2,125 |03.01.2006 |exempted |20 |

| |1602 42 10 |animals | | | | |

| |1602 49 11 | | | | | |

| |1602 49 13 | | | | | |

| |1602 49 15 | | | | | |

| |1602 49 30 | | | | | |

| |1602 49 50 | | | | | |

|37. |1602 50 |Prepared meat of bovine animals |500 |03.01.2006 |exempted |10 |

|38. |1701 11 |Cane sugar, raw |20,000 o/w : |  |exempted |  |

| |1701 12 |Beet sugar, raw |7,000 new |  | |100 |

| |1701 91 |Other sugar |importers |  | |200 |

| |1701 99 |White sugar or other sugar, not |13,000 |03.01.2006 | | |

| | |containing flavorings or |traditional | | | |

| | |coloring matter | | | | |

| | | |15,000 traditional | |18,8 |200 |

| | | |  | | | |

|39. |2001 10 00 |Cucumbers including gherkins, |2,000 |03.01.2006 |exempted |10 |

| |2001 90 70 |preserved by vinegar | | | | |

| |2001 90 93 | | | | | |

| |2001 90 99 | | | | | |

|40. |2002 |Tomatoes, preserved, other than |2,000 |03.01.2006 |exempted |10 |

| | |by vinegar | | | | |

|41. |2005 20 20 |Potatoes, preserved, other than |250 |03.01.2006 |exempted |10 |

| |2005 20 80 |by vinegar, non-frozen, other | | | | |

| | |that of heading 2006 | | | | |

|42. |2005 40 00 |Peas, preserved, other than by |1,200 |03.01.2006 |exempted |10 |

| |  |vinegar, non-frozen, other that | | | | |

| |  |of heading 2006 | | | | |

| |  |Beans | | | | |

| |2005 51 00 |Other | | | | |

| |2005 59 00 | | | | | |

|43. |2005 70 |Olives, preserved |5,000 |03.01.2006 |exempted |60 |

| |  | | | | | |

|44. |2007 10 10 |Jams, fruit jellies, marmalades |500 |03.01.2006 |exempted |10 |

| |2007 10 99 | | |  | | |

| |2007 99 10 | | |  | | |

| |2007 99 20 | | |  | | |

| |2007 99 31 | | | | | |

| |2007 99 33 | | | | | |

| |2007 99 39 | | | | | |

| |2007 99 55 | | | | | |

| |2007 99 57 | | | | | |

| |2007 99 91 | | | | | |

| |2007 99 98 | | | | | |

|45. |2009 50 10 |Tomato juice |100 |03.01.2006 |exempted |5 |

| |2009 50 90 | | | | | |

|46. |2009 61 2009 69 |Grape juice (including must), |1,000 |03.01.2006 |exempted |20 |

| | |with or without added sugar | | | | |

|47. |2009 80 11 |Pear juice, with or without |300 |03.01.2006 |exempted |20 |

| |2009 80 19 |added sugar | | | | |

| |2009 80 35 | | | | | |

| |2009 80 38 | | | | | |

| |2009 80 50 | | | | | |

| |2009 80 61 | | | | | |

| |2009 80 63 | | | | | |

| |2009 80 69 | | | | | |

| |2009 80 71 | | | | | |

| |2009 80 79 | | | | | |

| |2009 80 86 | | | | | |

| |2009 80 89 | | | | | |

| |2009 80 95 | | | | | |

| |2009 80 96 | | | | | |

| |2009 80 99 | | | | | |

| |2009 90 11 | | | | | |

| |2009 90 19 | | | | | |

| |2009 90 21 | | | | | |

| |2009 90 29 | | | | | |

| |2009 90 31 | | | | | |

| |2009 90 39 | | | | | |

| |2009 90 51 | | | | | |

| |2009 90 59 | | | | | |

| |2009 90 94 | | | | | |

| |2009 90 96 | | | | | |

| |2009 90 98 | | | | | |

|48. |2209 00 11 |Vinegar (of wine), bottled in |1,000 |03.01.2006 |  |20 |

| |  |less than 2 liters |  |  |exempted |  |

| |2209 00 19 |Vinegar (of wine), bottled in |100 |03.07.2006 | |5 |

| |  |more than 2 liters | | | | |

| |2209 00 91 |Vinegar (other than of wine), | | | | |

| |  |bottled in less than 2 liters | | | | |

| |  |Vinegar (other than of wine), | | | | |

| |  |bottled in more than 2 l | | | | |

| |2209 00 99 | | | | | |

|49. |2309 10 |Dog or cat food |11,000 |03.01.2006 |exempted |100 |

|50. |2401 cu excepţia |Raw tobacco |3,200 |03.01.2006 |exempted |62,5 |

| |2401 30 00 | | | | | |

|51. |ex |Tobacco stems |500 |03.01.2006 |exempted |10 |

| |2401 30 00 | | | | | |

Table 7. TRQs applied in 2006 for Processed Agricultural Imports Originating from EU

| |HSC |Product |TRQ (MT), |Date of opening |Import duty (%)|Unitary |

| | | |if not otherwise |(dd.mm.yy) | |allocation (MT if|

| | | |specified | | |not otherwise |

| | | | | | |specified) |

|2. |1806 9070 |Chocolate and other food |240 |03.01.2006 |0 |2 |

| |1806 9090 |products containing cocoa |  |  |  |  |

| | | | | |  | |

|3. |1901 2000 |Mixes and doughs for the |200 |03.01.2006 |0 |2 |

| | |preparation of bakers’ wares of | | | | |

| | |heading 1905 | | | | |

|4. |1904 10 10 |Prepared foods obtained by the |220 |03.01.2006 |0 |2 |

| | |swelling or roasting of cereals | | | | |

| | |Prepared foods from unroasted | | | | |

| |1904 20 91 |cereal flakes or mixtures and | | | | |

| | |roasted corn flakes | | | | |

|5. |1905 2010 |Bread, pastry, cakes, biscuits |5,000 |03.01.2006 |0 |10 |

| |1905 2030 |and other bakers’ wares, whether| | | | |

| |1905 3111 |or not containing cocoa | | | | |

| |1905 3119 | | | | | |

| |1905 3191 | | | | | |

| |1905 3199 | | | | | |

| |1905 32 | | | | | |

| |1905 9045 | | | | | |

| |1905 9055 | | | | | |

| |19059060 | | | | | |

| |19059090 | | | | | |

|6. |2004 1091 |Potatoes prepared or preserved |180 | 03.01.2006 |0 | 2 |

| |2005 2010 |otherwise than by vinegar, | |  |  |  |

| | |frozen. Other than products of | |  | |  |

| | |heading 2006 | |  | | |

|7. |2102 3000 |Prepared baking |60 |03.01.2006 |0 |1 |

| | |Powders |  | | | |

| | | |  | | | |

| | | |  | | | |

|8. |2105 0010 |Ice-cream |160 |03.01.2006 |0 |1 |

|9. |2202 |Waters, including |5,000 |03.01.2006 |0 |20 |

| | |mineral and aerated waters, | | | | |

| | |containing added sugar and other| | | | |

| | |sweeteners | | | | |

|10. |2203 00 |Bear made from malt |15,600 HL |03.01.2006 |0 |100 |

|11. |ex 2204 10 |Wine of fresh grapes |60,000 HL |03.01.2006 |0 |500 |

| |220421 | | | | | |

| |220429 | | | | | |

|12. |2205 |Vermouth and other wine of fresh|1,200 HL |03.01.2006 |50% of MFN duty|20 |

| | |grapes | | | | |

|13. |2208 20 |Spirits obtained by distilling |2,000 |03.01.2006 |50% of MFN duty|20 |

| | |grape wine or grape marc | | | | |

|14. |2208 30 |Whisky |6,500 HL |03.01.2006 |17.5% |20 |

|15. |2208 40 |Rum and tafia |100 HL |03.01.2006 |50% of MFN duty|1 |

|16. |2208 50 |Gin and juniper distilled |100 HL |03.01.2006 |50% of MFN duty|1 |

|17. |2208 60 |Vodka |200 HL |03.01.2006 |50% of MFN duty|1 |

|18. |2208 70 |Liqueurs |150 HL |03.01.2006 |50% of MFN duty|1 |

|19. |ex 2208 90 |Other (not including 2208 9033 |800 HL |03.01.2006 |50% of MFN duty|10 |

| | |2208 9038, 2208 9048, 2208 9071,| | | | |

| | |2208 9091 and 2208 9099) | | | | |

|20. |2403 |Other manufactured tobacco and |135 |03.01.2006 |30% |5 |

| | |substitutes, processed; | | | | |

| | |“homogenized” tobacco, extracts | | | | |

TRADE RESTRICTIONS AND OPPORTUNITIES

Another significant surge from the previous year’s level of $197 million, the total value of U.S. agri-food exports to Romania reached $231 million at the end of 2006. Top exports were, as already traditionally: frozen poultry meat (27 percent of the total), swine meat (25 percent, or, in absolute figures $57 million, a notable boost from $14 million in 2004), cigarettes and tobacco (25 percent), food preparations and ingredients (6 percent), sunflowerseed (3 percent), animal casings and beef tripe (2 percent).

With prices that competitively stabilized, US were able to conserve their position of top supplier of poultry meat to Romania, making up for roughly 50 percent of country’s imports of this product. Nonetheless, according to Romania’s new import schedule (valid from February 16 through December 31, 2006), tariff rates for two poultry products, defined by the codes 0207 1420: chicken halves and quarters, and 0207 1460: chicken leg halves and quarters, were temporarily increased for 6 months (February 16 – August 15) to 70 percent (from 45 percent in 2005). The Romanian authorities justified this radical action by the special situation triggered on the domestic market by the highly pathogenic Avian Influenza outbreaks (see RO6005).

For the past two years, US has also consolidated its position on the Romanian hog meat market: in 2005, 25,655 MT of swine meat (out of imports totaling 192,490 MT) were originated from US. Despite the pressure exerted by hog growers, for swine meat the same trade regime from 2005 was extended into 2006, including a number of positions (cuts for processing) exempted from taxes (on an MFN basis). Domestic supply of quality swine meat for processing is very limited, with livestock numbers and overall meat production down in 2005. Duty on swine liver (HSC 0206 41) was decreased to 10 percent in 2006 (from 20 percent in 2006).

The waiver on import duties is expected to continue expanding opportunities for U.S. frozen pork cuts and offalls. This figure more than tripled from 2004 (when US shipped 7,200 MT). Other major suppliers were Germany, Canada, France, Spain. The duty-free quota granted by Romania to EU under the Association Agreement is 23,000 MT per year.

High valued processed products are also boosting in tandem with average income of Romanian consumers. Products with good perspective on the Romanian market remain distilled spirits (bourbon whiskey), nuts (almonds), and snack foods. For beef tripe and natural casings, US continue to be country’s top supplier.

Free Trade arrangements (especially with EU) result in customs duty differentials for many U.S. products, which lately deepened as Romania gets closer to EU accession and has to gradually adopt the CXT. US exporters have voiced concerns about these tariff differentials, including exporters of distilled spirits, wheat, animal feed supplements, wine, etc. Moreover, US exports of meat and biotechnology products can be severely impacted in the second half of the year if Romania decides to implement the EU sanitary and phytosanitary prior to accession.

Romania shipped to U.S. in 2005 a total value of $6.3 million (slightly less than in 2004) in agricultural and food products, mainly wines (30 percent), cheeses (27 percent), semi-canned fruits, food preparations and ingredients, mineral water.

-----------------------

[1] The Economist Intelligence Unit, March 2006: “All macro-economic indicators suggest that the current consumption boom relying on imports is not sustainable." 

[2] World Bank (2004).

[3] The Leu and was redenominated as of 1 July 2005, the Leu dropping four zeros. One new Leu (RON) is equivalent to 10,000 old Lei (ROL). The redenomination of the Leu is intended to, inter alia, simplify monetary transactions, mark the end of the inflationary cycle and the start of price stability, and facilitate the future conversion to the euro. Holders of ROL will be able to exchange them for RON at banks until 2009 (Economist Intelligence Unit, 2005).

[4] Vice-governor Cristian Popa (March 2006).

[5]A preferential duty of 45% for sugar is granted to the 42 trading partners signatory to the Global System of Preferences.

[6] At the annual average exchange rate of 29,1 RON for 1 US$.

[7] Exempted from customs duties only if does not benefit from export subsidies at origin.

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Global Agriculture Information Network

USDA Foreign Agricultural Service

GAIN Report

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